With the deadline for filing income tax returns (ITR) for FY 2023 drawing near, taxpayers are advised to file early. Filing ahead of time allows for a thorough evaluation of deductions, such as NPS investments and tax-free savings account interest, among others.
The last date for filing income tax returns (ITR) for FY 2023 is merely a week away. The income tax department strongly encourages taxpayers to file their returns as soon as possible and not wait until the final day. As of now, over four crore income tax returns (ITRs) have been filed for the 2022-23 financial year, with approximately 7 per cent of them being submitted by new or first-time filers, as highlighted by CBDT chairperson Nitin Gupta.
What are the reasons for individuals to file ITR well ahead of the deadline?
By filing ITR in advance, you'll have sufficient time to assess all the deductions you can avail.
The Income Tax Act of 1961 offers various tax benefits that can assist in lowering your tax liabilities. Well-known benefits such as the Standard Deduction under Section 80C of the Income Tax Act are commonly utilized. However, numerous other deductions are available under different sections of the Act, enabling you to claim them and minimize your taxable income to the maximum extent possible.
Ensure to claim these six deductions while filing ITR 2023.
1) Tax Benefits of National Pension Scheme (NPS) Investments
Investing in NPS allows you to avail tax benefits beyond the ₹ 1.5 lakh limit. You can invest up to ₹ 50,000 in NPS and claim this additional benefit under Section 80CCD (1B).
2) Tax Exemption on Savings Account Interest
According to Section 80TTA of the Income Tax Act, taxpayers can enjoy a tax-free income of up to ₹ 10,000 per annum from interest earned on their savings accounts.
3) Claiming Deductions on Education Loan Interest
Section 80E allows you to claim a deduction on the interest paid towards an education loan. This deduction can be availed if you have taken the loan for the higher education of your spouse, children, or a student for whom you are the legal guardian. You can claim this deduction for eight consecutive years, beginning from the year you start repaying the education loan.
4) Tax Deductions on Donations
Contributions made to funds supported by the central government allow for full deduction claims. For example, if you donate to the Prime Minister's Relief Fund, Chief Minister's Relief Fund, and similar funds, you can avail a 100% deduction. However, for other eligible donations, you can claim a deduction of 50%.
5) Tax Benefits for Preventive Health Check-ups
Balwant Jain, a Mumbai-based investment and tax expert, explained that individuals can avail up to ₹ 5,000 as a deduction for preventive health check-ups. This deduction can be claimed for the taxpayer, their dependent children, spouse, or parents below the age of 60, under Section 80D. However, for parents aged 60 or above, the eligible amount for deduction increases to ₹ 7,000.
6) LIC and PPF Deductions
According to Balwant Jain, parents can claim deductions for LIC (Life Insurance Corporation) and PPF (Public Provident Fund) contributions even when filing their Income Tax Return for their children who are not financially dependent on them.
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